Silence

Many of my readers have noticed that the frequency of my posts has gone way down the last 8 weeks. While I generally am a private person who likes to keep my personal live and business lives separate, the number of people who have asked encouraged me to break this rule.

Rather than recount the reasons for this, I’ll just refer you to my niece and nephew’s blog: http://kickincancer.wordpress.com/.

This blog is really the best of why blogging was created on the Internet. It has created a much larger family, allowed an outlet, and became a way for those concerned to follow our family. Thanks, Evan!

Merger of Angel-backed Companies

Most startups first create a feature. If they are smart, it will be a unique feature that fits a demonstrable customer need in the market and they can have many customers adopt their technology. If the company is really good, they will transform this feature into a product. If that works, they might get to create a series of related product and make a product line. Rarely will the startup create a full-fledged company.

It is when a startup grows its business to the Company stage that it can get exceptional value (<$100M). In general this takes experience and skills that aren’t usually found either in a startup or on their board.

Most angel-backed startups have trouble making it beyond the feature or product stage. In the past, many startups counted on VC funding to grow to the product line and company stage. This is now exceedingly rare, given both the number of angel-backed startups and the limited activity of VCs (see some of my previous posts).

So what does that mean? One outcome is that we move our angel-backed startups to profitability and they grow organically. This can lead to an acquisition, but more often than not, exits are rarer than we would like. (I will be doing a post on this soon.)

I predict that we will begin to see a wave of mergers between successful angel-backed companies. This makes perfect sense.

When two companies are in alignment and have products/features that can satisfy a broader set of customer needs, builds revenue and a customer base that exceeds critical mass, and gives the combination the chance to get to the company stage – creating a lot more value than the two companies separately.